Cash Out, Cards In: Debit Cards Overtake Cash For The First Time
It’s now official: debit cards have finally outpaced cash usage for the very first time.
New figures show that an impressive 13.2 billion debit card payments were made last year, which shows a 14% increase on 2016. In contrast, cash payments totaled just 13.1 billion, while showing the use of both notes and coins dropping by 15%.
Further compounding the fact that cards are becoming the new norm, the annual report – which looks at UK consumer spending habits – estimates that around 3.4 million people barely paid using cash at all throughout 2017.
And while that might not sound like much, experts believe that figure is only likely to rise – in fact, it’s almost an inevitability as technology advances. According to Adam Herson, director of Barclaycard Mobile Payments:
‘More recently, we have seen a surge in the use of wearable and mobile payments, creating new, exciting opportunities for both shoppers and brands. Consumers are increasingly able to match their payment accessory or device to their lifestyle or fashion taste. We expect this increase in popularity to continue for the foreseeable future.’
Indeed, contactless payments doubled to 5.6 billion, with supermarkets accounting for the majority of those expenditures, although card issuers were keen to note that contactless car parking and public transport payments were also on the rise.
While 15% of all debit card payments were contactless, UK Finance, the body which represents high street banks, reckons that by 2027 it will rise to 36%. That growth is likely to be driven by younger consumers, aged between 25 and 34, for whom contactless is a simple alternative – particularly with the advent of mobile payments like Google and Apple Pay, which have become more widespread. This age group is also more likely to refuse to use cash over card-based alternatives.
In 2017, contactless cards accounted for 15% of all payments, but UK Finance – which represents the major banks – has predicted this proportion to rise to 36% a decade later. The growth of online shopping and card acceptance among smaller traders would lead to further growth in debit card use in general, UK Finance said.
The report also highlighted the fact that, in the UK, just 15% of all payments were on regular bills and monthly out-lays; the majority of the 38.8 million payments were spent on ‘spontaneous purchases’ – a fact that’s likely to worry industry experts already concerned about the public’s spending and borrowing levels.
Despite debit cards becoming the payment of choice, it’s unlikely to mean the end of cash – at least for the foreseeable future. Stephen Jones, UK Finance’s chief executive, said:
‘The choice of payment options available in the UK is allowing people to choose to pay the way that best suits them. But we are far from becoming a cash-free society and despite the UK transforming to an economy where cash is less important than it once was, it will remain a payment method that continues to be valued and preferred by many.’
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